Failed wholesaler Palmer & Harvey (P&H), which collapsed into administration just weeks before Christmas, is set to be grilled by an influential Commons select committee.
Former bosses at the 92-year-old company, which was the UK's largest cigarette supplier, will come under the Work and Pensions Committee's spotlight to give evidence on a 2008 management buyout. The deal, which valued P&H at £345m, resulted in a bumper payout for senior executives but left the business lumbered with a hefty debt load.
Christopher Etherington, the former chief executive who was brought in to lead the management buyout but quit in 2016, received an interest-free loan from the company of more than £3.4m to buy shares. Directors later changed the terms of this loan so it was not repayable if the company went bust, but only if he sold his shares – which is near-impossible now the company is in administration. Etherington will be a key witness, according to the Sunday Times.
The Work and Pensions Committee also expressed concern that £70m, according to accounts, had been paid out in dividends on preferred stock between 2009 and 2016. This happened as the pension deficit more than doubled to £80m.
Frank Field, chair of the committee, first wrote to P&H's finance director Jonathan Moxon at the beginning of December. He requested full details of the pension scheme deficit, and demanded to know how the dividend policy had been justified.